COLLECTOR OF CENTRAL EXCISEversusCALCUTTA STEEL INDUSTRIES AND ORS.

                      COLLECTOR OF CENTRAL EXCISE                                  A
                                           v.
                 CALCUTTA STEEL INDUSTRIES AND ORS.

                                 OCTOBER 27, 1988

         [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]                             B

            Central Excises and Salt Act, 1944-Central Excise Tariff Items
        26AA (ia) and 26AA (ii)-Hoop and Strip whether assessable to duty.

              The respondent company filed revised classification lists classify-
        ing all rectangular products of thickness below 3.0 mm manufactured C
        by them as bars covered by Tariff Item 26AA(ia) of the Central Excise
        Tariff. The Asstt. Collector, Central Excise took the view that
        rectang'11ar products of thickness less than 3.0 mm and of width less
        than 75 mm fell under the definition of 'Hoops' and merit classification
,       under Tariff Item 26AA(ii) and exigible to the appropriate duty. The
        respondent preferred an appeal before the Collector of Central Excise D
        who held that the product fell within the definition of 'Hoops' and
        upheld the order of the Asst!. Collector.

              The respondent appealed to the Tribunal which held that the flat
        product of thickness less than 3.0 mm and a width of less than 75 mm
        was classifiable as 'bars' as claimed by the respondent company and not    E
        as 'Hoops' and allowed the appeals.

              The Department therefore filed the appeals under Section 35L(b)
        of the Central Excises & Salt Act, 1944 before this Court.

              Dismissing the appeals, this Court,                                  F

              HELD: If the revenue wants to tax a particular goods known as
        such then the onus is on the Revenue. [600FJ

              'Hoop' is made either by slitting coiled strip rolled in multiple
,   I   width, into narrow coiled strip of the desired width, or from narrow G
        coiled strip with a hot-rolled or mill edge and the type and width of
        hoop being produced influences the choice of the method used. [S99B] ·

              Curled hoop is made by a pinch-roll and curved guide-shoe
        arrangement that permits the hoop to take a circular form. A straight
        length hoop is produced merely by removing the curved guide-shoe. [5990I   H
                                          595
     596         SUPREME COURT REPORTS                  [ 1988] Supp. 3 S.C.R.

           Straight length is not a short length, it is long. {599E)
A
          The· fact is that they were produced in a mill that could produce
    hoops and· strips. Their lengths are not such as to place them in the same
    class as hoops. Having, therefore, regard to this and the relevant tariff
    item, the Tribunal came to the conclusion that it will be more appropriate
B   to assess them under Item 26AA(ia) than Item 26AA(ii). [599G-H; 600A]

         South Bihar Sugar Mills Ltd. v. Union of India & Ors., [1968) 3
    S.C.R. 21, referred to.

          In an appeal under Section 35L(b) this Court has to see the
    propriety and the correctness of adjudication. There was no misdirec-
c   tion in law nor any non-consideration of facts. There is no exclusion
    from consideration oflegitimate proper materials. [600F-G I

         CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
    1671-87 of 1987.
D
         From the Judgment and order dated 22.4.1987 of the Customs,
    Excise and Gold (Control) Appellate Tribunal, New Delhi in
    Appeal No. 1546, 1547 etc. in Order No. 267 to 283 of 1987 BJ.

          M.K. Banerjee, Solicitor General, R.P. Sriv.astava and
E   P. Parmeswarn for the Appellants.

         Soli J. Sorabji, K.K. Patel, Rajiv Dutta and R.S. Sodhi for the
    Respondents.

           The Judgment of the Court was delivered by
F
        SABYASACHI MUKHARJI, J. These are appeals from the
  decision of the Customs, Excise & Gold (Control) Appellate Tribunal,
  New Delhi (hereinafter referred to as 'CEGAT') under Section 35L(b)
  of the Central Excises & Salt Act, 1944 (hereinafter called 'the Act').
  The respondent Calcutta Steel Industries filed revised classification
G liMs wherein they had classified all rectangular products of thickness
  below 3.0 mm manufactured by them as bars covered by Tariff item
  26AA(ia) of the Central Excise Tariff. The Assistant Collector, Cent-
  ral Excise was of the tentative view that rectangular products of thick-
  ness less than 3.0 mm and of width less than 75 mm conform to the
  definition of Hoops and merit classification under item (ii) of Tariff
H Item 26AA attracting effective rate of duty of Rs.450 per MT less the
      COLLECTOR OF C.E. v. STEEL INDUSTRIES TMUKHARJI; J.J          597

reduction provided for under Notification No. 55/80 dated 13th May,
                                                                          A
1980. The respondents were, therefore, called upon to show cause as
to why the classification list should not be amended and duty charged
accordingly. The respondents submitted their written statement and
requested for a personal hearing. The matter came up for adjudication
before the Assistant Collector, Central Excise. He held inter alia that
the type of Mills used for the manufacture was irrelevant. He relied on   B
the definition of "Hoops" evolved in consultation with the Ministry of
Steel and the Indian Standard Institution. The revised definition was
as follows:

           "The finished product, generally of cross-section with
           edges of controlled contour and of thickness 3.0 mm and        C
           over width 400 mm and below and supplied in straight
           lenths. The product shall have rolled edges only (square or
           slightly rounded). This group also includes flat bars with
           bulb that has swelling on one or two phases of the same
           edge under width of less than 400 mm.
                                                                         D
      The Assistant Collector, Central Excise on the basis of certain
discussion, in his order, was of the view that rectangular products of
thickness less than 3.0 mm and of width less than 75 mm were hoops
and were correctly classified under sub-item (ii) of Tariff item 26AA of
the Central Excise Tariff and accordingly exigible to the appropriate
duty. The revised classification list was accordingly modified and E
approved. The respondents preferred appeals to the Collector of Cent-
ral Excise (A.ppeals). The Collector considered the Indian Standard
1956-62 (2nd reprint May 1975) which defined "Hoops" as follows:

            "5.54 HOOP (bailing, hoop iron)-a Hot Rolled Flat Pro-
            duct, rolled in rectangular section of thickness less than 3.0 F
            mm and width less than 75.0 mm."

He held that according to the specifications the product in question
sequarely fell within the above definition particularly when the
description of the Tariff Items covered "Hoops, all sorts". The Appel-
late Collector also considered the definition of "Hoop and Strips" in G
the Brussels Tariff Nomenclature which described these as follows:

            "Hoop and Strip (heading No. 73.12)

            rolled products with sheared or tihslieared edges of
            rectangular section, of a thickness set exceeding 6 milli- H
    598          SUPREME COURT REPORTS               [1988] Supp. 3 S.C.R.

                metres, of widfh not exceeding 500 millimetres. and of such
A
                dimension that the thickness does not exceed one-tenth of
                the width, in straight strips, coils or flattened coils."

          He accordingly held that this definition showed that the edges of
    the product in question might be sheared or unsheared and the pro-
B   ducts might be in straight lengths or in coils. He also held that the
    nature or type of mill cannot by itself be the determining factor of the
    issue in dispute which has to be determined taking into account all
    relevant considerations, viz., the phraseology and the scope of the
    Tariff Entry, the trade practice terminology, well-recognised standard
    national and international technical literature. In the result, the
    Appellate Collector of Central Excise inter a/ia for the reasons stated
c   above, found no reason to interfere with the order of the Assistant
    Collector, Central Excise which was accordingly upheld.

          The respondents preferred appeals to the Tribunal. The Tribunal
    allowed the appeals and held that the flat product of thickness less
D   than 3.0 mm and a width of less than 75 mm is classifiable as bars as
    claimed by the respondents herein and not as hoops as held by the
    Assistant Collector, Central Excise and upheld by the Appellate Col-
    lector of Central Excise. in allowing the appeals, the Tribunal refer-
    red to U.S. Steel Publications (The shaping and treating of steel)
    wherein it is stated as follows:
E
               "goods have been rolled in a bar mill and have not been
               subjected to the process mentioned by the book for produc-
               ing hoops and that they were not meant for bailing or
               packaging which a hoop is meant for."

F         The Tribunal in its order discussed various aspects of the matter.
    The Tribunal noted that the Collector had stated and what are the
    different categories. In U.S. Steel Publication (The Making, Shaping
    and Treating of Steels) edited by Herald E. Mc. Gannon 9th Edition
    whom the Tribunal has described as an authority on the Steel and we
    presume he is, there are some observations at page 808 under the
G   heading "Narrow Flat-rolled products" which are relevant. There,
    "Hoops" have been described as follows:

               "Hoop-There are four general classification of this type
               of products:

H               1. Tight cooperage hoop for barrels to hold liquid.
      COLLECTOR OF C;E. v: STEEL INDUSTRIES [MUKHARJI, J.]             599

            2. Slack barre II hoop for barrels to hold dry products.
                                                                              A
            3. Tobacco barrel hogshead hoop, and

            4. Special hoop for special packages."

      It has further to be .noted that ''hoop" is made either by slitting     B
coiled strip rolled in multiple width, .into narrow coiled strip of the
desired width, or from narrow coiled strip with a not-rolled or mill
edge and the type and width of hoop being produced influences the
choice of the method used. It further appears that the method of the
products in question is not one of the methods listed in this authorita-
tive work for hoops. The so called hoops were not produced by slitting
coiled strip nor rolled from narrow coiled strip, with hot rolled or mill     c
edge. The article, as has been noted, says that "hoop" is produced as
'curled hoop' or 'a straight length'. Curled hoop is made by a pinch-
roll and curved guide-shoe anangement that permits the hoop to take
a circular form. A straight length hoop is produced merely by remov-
ing the curved guide shoe.                                                    D

      The Tribunal was conscious that the goods in question were
neither curled hoops nor straightlength. In those circumstances, it was
necessary to understand clearly that the "straight length" used in this
book is not the straight length understood by the department which
seems to think that any short straight length is the straight length          E
signified by the term for these products. It is nothing of the kind as can
be seen from the above passage quoted from the authority. Straight
length is not a short length, it is long. The means of producing the
goods is completely different from what is generally written. The
Tribunal was justified in holding that it is not possible to agree with the
department that the manner of production of the goods can be taken            F
into account.

     It has also to be borne in mind that the very nature of the mill
was a criteria to decide the nature of the product manufactured.
Further, however, taking into account the nature and type of the mill
cannot itself be the determining factor in the issue in dispute. The G
Tribunal also took into account that these are produced in a mill which
cannot produce hoops or strips. The Tribunal found the fact that they
were produced in a mill that could produce hoops and strips. Their
lengths are not such as to place them in the same class as hoops.
Having, therefore, regard to this and the relevant tariff item, the
Tribunal came to the conclusion that it will be more appropriate to H
    600         SUPREME COURT REPORTS                [1988] Supp. 3 S.C.R.

A   assess them under item 26AA(ia) than under Item 26AA(ii). The
    Tribunal has considered all the relevant facts. There was no misdirec-
    tion on the facts. All proper and relevant materials relevant for the
    determination of the question before the Tribunal have been applied
    to. Reliance was placed on certain observations of this Court in South
    Bihar Sugar Mills Ltd. v. Union of India & Ors., [1968] 3 SCR 21.
B
    There, this Court was dealing with Item 14A and the appellants'
    manufacturing mixture of gases containing carbon dioxide by burning
    lime-stone with coke in using only the carbon dioxide from the mixture
    for refining sugarcane juice and for producing soda ash by solvay
    ammonia soda process-Whether the mixture of gases was kiln gas or
    compressed carbon dioxide covered by Item 14-H in Schedule I to
c   the Act. It was held by this Court that the gas generated by the
    appellant companies was kiln gas and not carbon as known to the
    trade, i.e., to those who deal in it or who use it. The kiln gas in
    question th.erefote is neither carbon dioxide nor compressed carbon
    dioxide known as such. to the commercial community and therefore
    cannot attract Item 14-H in the First Schedule. It was held that it was
D   incorrect to say that because the sugar manufacturer wants carbon
    dioxide for carbonisation purposes and sets up a kiln for it that he
    produces carbon dioxide and not kiln gas. In fact what he produces is a
    mixture ·known both to trade and science as kiln gas one of the consti-
    tuents of which is no doubt, carbon dioxide. The kiln gas which is
    generated in these cases is admittedly never liquified nor solidified and
E   is .therefore neither liquified nor solidified carbon dioxide, assuming
    that it can be termed carbon dioxide. It cannot be called compressed
    carbon dioxide as u.nderstood in the market among those who deal in
    compressed carbon dioxide. If the Revenue wants to tax a particular
    goods known as such then_ the onus is on the Revenue. That they have
    failed. The Tribunal has analysed all the aspects. In appeal, we have to
F   see the propriety and the correctness of adjudication. Having
    examined the aspects from all angles, we find that there was no misdi-
    rection in law nor any non-consideration of facts. There is no exclusion
    from consideration of legitimate and proper materials. In the
    premises, we have also examined the ultimate conclusion of the Tri-
    bunal. That conclusion appeals to us. It follows irresistibly from the
G   other premises as indicated hereinbefore. In the premises, the appeals
    fail and are accordingly dismissed.

    S.K.A.                                               Appeals dismissed.